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Clubs to benefit from Man C folly; Premier FFP is next

By Tony Attwood

Michel Platini and Uefa general secretary Gianni Infantino are engaged in discussions with Karl-Heinz Rummenigge, chair of the European Club Association over what to do with the fines that the clubs guilty of not meeting FFP sanctions are going to be paying.

The issue of these fines is one of significance in each league that has FFP (remembering that the Premier League has its own FFP, as does the Championship, and Leagues One and Two.)  Indeed the issue of what to do with fines has already exercised the Premier League and the Championship when it relates to clubs that flagrantly break the Championship FFP but then win promotion.

The Championship wanted the money to go to the clubs remaining in the league, but the Premier League refused to accept this, and so the money will go to charity.   As I said in a previous article I expect Leicester to be heavily fined, although we had correspondence on the site accusing me of not knowing anything about the situation.  Interestingly the phraseology used was very similar to that used by Manchester City supporters in that period between their club being found guilty by Uefa of overdoing things with their £1 billion spending spree under Sheik Manour bin Zayed al Nahyan, and the club finally, belatedly, accepting its punishment (although with rather bad grace for royalty, I felt.)

(You may recall that the desperate hope of an EU intervention was trounced a couple of weeks back, when the courts showed no interest.)

So under the Uefa scheme currently being debated, all the Premier League clubs from 2013/14 will get a slice of Man City’s fine – including the three relegated clubs.

In fact the plan being hatched is that the pot of money gathered from Man City, PSG and the rest is to be shared between all the clubs (except the guilty) that are competing in Europe, plus the teams in the leagues that were affected by the overspending of Man City etc etc.

Now with such a wide spread of money, each team won’t get much – maybe under half a million pounds – in the unlikely case of all the clubs going along with the rules from now on.   But PSG look as if they are going to keep on spending, and it is unclear quite how Man City are going to reduce their costs in order to reduce their losses, now that their accountancy fiddles have been found to be…. fiddles.  So there could be quite a bit more.  Quite interesting to see money from Man City et al going into Arsenal and the rest.

But European FFP is only the start.  For now we have to start to focus on Premier League FFP rules.

These comes in two parts.  What I am going to give here is only a summary, and I suspect we shall learn more as the first deadline (the end of 2014) approaches.

1: The Loss

This is restricted to £105m over three seasons if the owner is putting money in to cover the losses, or £15m over three seasons if the owner is not putting money in.

I can’t see this affecting any of the regular top clubs, but it could affect some of the promoted clubs like Leicester who look as if they are going to buy players like mad to try and stay up.  Some of the clubs that occupy mid to lower positions might well be stuck if they have high wages to secure the continuity of a place in the Premier League, but only modest commercial and match day income.

2: Wage restrictions.

Club wages up to £52m a year are not affected.  But if the wages bill is over this the maximum increase is £4m a year plus the extra money from any commercial deals.

Now the £52m is pretty irrelevant because in 2012/13 – the last year figures are available for, every Premier League club spent more than £52m a year on salaries.  Even Wigan and Reading.  Arsenal spent £283m and were the second highest spenders – although they are of course now overtaken by Man C.

£4m a year (the allowed increase) is £80,000 a week – below the average salary of a regular first teamer in the Premier League, so expanding the net squad by one is going to go over the limit.  Chelsea and Man C are thus stopped from buying and buying players they don’t really want.  Tottenham’s spending spree with the Bale money would also be a problem in future, because although their spending on transfer fees was not way out of line with the income from the sale, the resultant salaries were.

Now salary increases can be offset by extra income – but where does that come from?  TV rights are just a year into a 3 year deal, none of the top clubs is moving into a new ground, Man U, the team that normally gets headlines for new commercial deals is not an attractive property at the moment, which leaves only Arsenal, which is announcing all sorts of new deals now the old ones which paid off part of the stadium debt, are over.

Liverpool will get Champions League money this season for the first time in quite a while, but Man U won’t – which puts even more pressure on their compliance given their boast of spending £150m on players.

So it is interesting that loss-making Liverpool, who are trying to find cash for their new stadium, are on a buy-buy-buy spree.  I suspect their chairman, who infamously boasted of fobbing Arsenal off with lies about Suarez last summer, is expecting he can get away with the same when the accountants start investigating.  This is interesting because it is the wages limit that comes in first…

Initial punishments and sanctions

Breaching wages is expected to be dealt with in December this year, with points deductions one of the main punishments.  Loss limits don’t come in until 2016.

Overall

My guess is that just as Man City and PSG barged into Uefa FFP in the foolish belief that “it doesn’t apply to us”, so Liverpool will do the same here.  Whether Man City are going to be as silly as to do this again, seems unlikely, but they were so certain they were right last time, that anything is possible.

Of course Liverpool may not get caught out this December, but if they carry on with the sort of spending that they are planning, they might be in a year’s time.

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20 comments to Clubs to benefit from Man C folly; Premier FFP is next

  • Mike T

    Tony

    When you say this:
    £4m a year (the allowed increase) is £80,000 a week – below the average salary of a regular first teamer in the Premier League, so expanding the net squad by one is going to go over the limit.

    I think you have really misjudged the impact of FFP on Chelsea . As I said when this was all agreed Chelsea’s wage bill being already so high will mean that we were very well placed to meet the wage increase restrictions

    Lets look just at three players : Lampard, Cole & Terry will all either be gone or in the case of Terry on a vastly reduced contract. I have read that this alone will free up in excess of £15 million a year add to that at least another £20 million from increased commercial deals , the £4 million allowable increase and £3 million from RDM and your looking at about £40 million. That’s before you factor in the savings from the likes of Essien, Mata, KDB & Luiz leaving.
    Ok Chelsea will have to replace Cole and Lampard and possibly Luiz (that’s assuming the replacements aren’t already on the clubs payroll) but if you are expecting the wage limit to impact on Chelsea bringing in1 player then I think you are in for a shock as my expectation is that there will be 5, 6 or even 7 new players arriving their wages being more than covered

  • Mandy Dodd

    Judging by David Luiz, not sure psg are doing much to tow the line, unless they are about to sell big this summer. Rumours of big Liverpool spending also. Guess the revenues are up in a big,way which may help these clubs?

  • jayramfootball

    FFP is a complete waste of time because the punishments dished out seem to be fines only. What good is that? Think about it. City’s ‘punishment’ is to get fined £40m or so. For overspending they can get out of it by paying even more money – which means nothing to them. Sure they have some restrictions on squad numbers in Europe but that won’t make a difference – they will just buy in some players who are ‘home grown’ , like Sagna and Fabregas.. (!).

    Forget FFP, its just a money making racket for the corrupted at UEFA. I don’t believe for a second that the money will b egging to other clubs or charity. It will b eliding the pockets of officials.

  • Amos

    Arsenal spent £283m on salaries in 2012/13??? That would be more than their total revenues for the year! It’s more like half of that. It’s true that Chelsea and City have set their current wage levels so high that it shouldn’t cause them too many problems in the short term but will gradually have a limiting effect. FFP is a ball and chain not a guillotine. Its effect is cumulative and it will take time to see its impact if the authorities remain determined enough.

  • Ray from Norfolk, Virginia

    They ain’t royals; using the term “royalty” is incorrect in this context.
    These Arabic Peninsula absolute monarchs were all hand picked by Western powers, and in particular Britain, as a parting gift, so the natural resources of the region would not be used to better the people, but to fund the despots’ hobbies. So, I say down with all Arabic-speaking monarchies, from the Atlantic Ocean (yes, you King of Morocco) to the Gulf (KSA, HKJ, and other Emirs and Sultans from Kuwait to Qatar, and Oman to the UAE).
    PS: That is a baker’s dozen, 13 parasitic intolerant oligokleptocratic regimes).
    PPS: Sorry for the rant, but the Saudi-sponsored official “Security Forces” in Lebanon have closed their eyes to Syrian refugee tent-burning when these refugees went to the polling stations at the Lebanese-Syrian border, as most are voting against the hubris created by the Saudi, Qatari, and Turkish authorities. Blatant penalties galore!!!

  • nicky

    @Ray,
    OIL OIl OIL
    What sins, over the years, have been committed in thy name.

  • para

    @Ray from Norfolk you say: “So, I say down with all Arabic-speaking monarchies”.

    Why not say: “down with all monarchies”, after all for some reason they self elevate themselves to be better than the rest of us, do absolutely nothing for the money they get, they are an anachronism in today’s world.

    Think how much better UK would be if royalty was gotten rid of, and the money taken from them and given back to the country. Let them live a little below the standards they are so used to.

    But it seems some people NEED to be “ruled”?

  • nicky

    @Para,
    Can’t talk about other countries but the contribution which our Sovereign makes to our Commonwealth of Nations is beyond measure. It binds us all in a relationship which, without compulsion, is envied throughout the world.

  • Mike T

    @Nicky

    Silly you

    Surely we would be better with the likes of a President Blair!

  • nicky

    @Mike T,
    Only if we could have his wife as First Lady.

  • oldgroover

    nicky

    Absolutely not! I’d rather have Morticia Adams.

  • menace

    Leave our democratic / monarchy alone. It is without doubt a perfect balance of honest fair corruption.

    The FFP and other financial controls on sport are an absolute false facade of fairness. Penalizing clubs that go bust is a joke. The penalty must be against the organisation that allowed the club to go bust. The onus of financial stability must eventually lie with the leagues. Every league must retain a large pot of money from owners to ensure clubs never go bust but owners that are responsible are never allowed within sport.

    All clubs must be working toward having a part (if not total) ownership by supporters. Commercial aspects of the clubs can be leased or managed with agreement of the owning supporters.

  • Mike T

    @oldgroover

    I thought they were one and the same!

  • Valentin

    @MikeT,
    You can always get rid of a president and his wife by voting for somebody else. If Queen Elizabeth’s son become king, then there is absolutely nothing that can be done about his dreadful wife.
    Check with what happen in Spain with abdication. Feline and his sibling are not the kind of person you would free proud to represent you.

    Because of the restriction on wage increase, most of the top clubs have delayed the announcement of new commercial deals. That allow them to completely bypass the restriction.

    With all the new contracts sign by Liverpool players suspect that Liverpool wage bill for the 2014-2015 season will jump. According to reports Suarez, Sturidge, Sterling, Countinho, Henderson will all be on around 100k/week. LFC already loses money. Looking at the number, I doubt that next season they will be able to comply with FFP. The aggravating circumstance is that as their situation worsen, they will not be able to use the argument that they are improving, unless they intend to sell Suarez next season. With none of pre 2010 contracts to justify the loss, I expect LFC to have a fight on their hand with UEFA accountants.

  • Mike T

    @Valentin

    In the US and a few democratic countries yes of course you can but all too often a President once elected or more often installed via force leads to loss in terms of the human rights and basic freedoms that we enjoy here in the UK.

    I am comfortable with the head of state being a monarch as opposed to it being a politician and I would suspect in a referendum the vast majority would agree.

    As for Liverpool their wage bill is already up there but more a worry for them is that unless FSG introduce significant capital by way of equity as opposed to loans then somehow they will have to turn the numbers round by quite a margin. The problem is that CL monies wont kick in till the next accounting period.
    I had a look the other day and I don’t think the pre 2010 contract thing will help them much in the accounting year 2014/15. From memory I don’t think any of their players are still on the contracts that were in place in 2010 all are just coming to an end or were extended or improved post the relevant date.

  • Sav from Australia

    Interesting article Tony.

    @Ray,
    I don’t think many know the truth about the present Arab monarchies. You sir know your history! In truth I think this sort of thing was done in many regions as the western powers pulled out of their colonies. For example India, which right up until their last election a month ago were beset by a corrupt Gandhi/Nehru dynasty that, along with others of that particular servile class, were handed power when their masters departed. The problem as I see it for the Arab states you mentioned is that at present the choice seems despots or jihadis.

  • Gord

    The BBC is reporting that the income across the 20 EPL teams crossed the 3 Billion pound mark this year.

    http://www.bbc.co.uk/news/business-27667472

    Various specific aspects of finance are mentioned.

    No mention of how much of that revenue made its way to 😈 Mike Riley and PGMOL.

  • Valentin

    @MikeT
    You misunderstood my comment about pre 2010 contracts. In the FFP, there is a proviso to consider with leniency expensive pre 2010 player contract. Most of LFC expensive contracts have been signed after 2012. So they can’t even use that argument to dodge out of the way of FFP sanction.
    That is why Terry had to take a huge pay cut. Chelsea renegotiated instead of automatically exercise their option. Lampard is also leaving because he refused to drop his financial demand at a level Chelsea deemed acceptable. Chelsea wage structure will be different, a few star player very well paid and a lot of mid ranking player with decent but not astronomical salary. Expect more departure of players still on high salary within the next two years. John Obi Mikel, Essien, Ramires, Cech,.

  • Mike T

    @ Valentin
    Yes apologies mis read your earlier post.

    You are indeed right about Chelsea and how Chelsea have adapted their pay structure. Its quite likely that none of the players you list will be at Chelsea come August 2014.

    Essien left in January. A clever move by Chelsea in that they paid him to leave and in so doing two years wages were shown in the base year.

    Mikel is said to be off and quite possibly Ramires is off to Spain and Cech will likewise be sold if Courtois returns.

  • M18CTID

    “and it is unclear quite how Man City are going to reduce their costs in order to reduce their losses,”

    Without too much research, that’s an easy one. £38 million more earned this season from domestic TV money compared to last season plus at least £30 million knocked off the wage bill as that’s what it cost to pay off Mancini and his backroom staff. Factor in amortisation plus extra sponsors and you can see why Ferran Soriano is saying we’ll break even in 2013-14